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Judgement Day in battle over P400m

Justice Omphemetse Motumise has set April 17 as judgement day in one of the country’s most complex and high-stakes legal cases revolving around P422 million of public pensioners’ funds.

Late night, Motumise also ruled that former High Court judge and veteran attorney, Peter Collins remain as statutory manager of asset manager, Capital Management Botswana (CMB), in the interim while final judgement is awaited.

Mmegi has been informed, however, that CMB intends to continue denying Collins access to its offices, as it holds the position that his appointment is unlawful and subject to the pending April 17 judgement.

Motumise reserved judgement just after 1800hrs yesterday, wrapping up marathon arguments in which at least 11 senior lawyers, one of them a part-time judge in South Africa, had spent 16 hours over two separate days arguing their cases.

The case before Motumise pits the largest pension fund and its regulator on one hand, CMB on the other and 170,000 public servants pensioners in the middle.

The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) is facing off against CMB, in a suit in which the regulator wants to place the asset manager under statutory management.

NBFIRA’s actions were prompted by complaints by the Botswana Public Officers Pension Fund (BPOPF), which is attempting to recover P422 million at one time under CMB’s management. Citizen-owned insurer, Bona Life also complained to NBFIRA over P133 million in assets under management. The pension fund and the insurer are unhappy about the manner in which the funds were managed.

The complex case also involves an investigation by the Directorate on Corruption and Economic Crime and a preliminary probe conducted by NBFIRA. A separate preliminary investigation by Collins was not accepted by the court.

NBFIRA’s senior advocate, Phillip Daniels told the court that the matter at hand was not whether CMB was guilty or not, but whether NBFIRA had a right under the law to place CMB in statutory management having noted the requirements of the law. The law gives NBFIRA the right if it appears that a firm “is involved in a financial crime, is of unsound financial position or is not complying with a financial services law”.

CMB have argued that had the regulator granted them a hearing, they would have resolved these allegations without need for a statutory manager.

“What is at stake is the pension and life savings of 170,000 public servants that are being managed by the first respondent (CMB),” Daniels said.

“The law states that the statutory manager may be appointed when these jurisdictional elements appear to be present, not that they are present or that a court has said they

are present.

“It must appear with information that comes to your attention, that these elements may exist.

“This is like a situation where a policeman goes to the magistrate and asks for a writ. That does not presuppose guilt or innocence.”

Responding, however, CMB attorney and part-time South African judge, Charles Thompson said the test of whether there was an appearance of the elements required by the law, had to be a weight greater than prima facie and greater than the balance of evidence. “The applicant is using third parties to interfere with the running of free companies,” he said.

“There has to be more evidence, otherwise every time a company has a gripe with another, they will make allegations and on those grounds, the first applicant will interfere because they believe there’s something wrong. “NBFIRA did not apply the rules of natural justice and grant us a hearing. The concerns individually raised did not amount to a concern of an urgent nature on the part of NBFIRA.

“This whole thing could have been avoided had NBFIRA acted reasonably and sought clarification. What we have here is a situation where my clients are facing drastic consequences by being placed under statutory management.”

He continued: “They are saying they did not need to approach CMB to afford them a chance to respond and this says the NBFIRA can be used by third parties to settle scores.” BPOPF senior advocate, Panayiotis Stais said it was significant that three clients of CMB, being BPOPF, BIFM and Bona Life had all laid complaints about the asset manager.

“There must be something wrong when CMB is in dispute with its three clients involving hundreds of millions of pula with alleged fraud and looting of funds,” he said.

“CMB cannot say their hands are clean and their clients are happy.

“Placing a company under statutory management is invasive, but only to the extent that it is asking the directors to step back and let the investigation happen.

“There should be no reason why a regulated entity does not want to cooperate. “When the statutory manager comes in, it does not mean the business stops. It does not go under. It simply continues without the involvement of the directors.”

For Motumise, the case before him consists five volumes of court documents, each with easily more than 200 pages of arguments, affidavits, answering documents, various pieces of evidence, incalculable court applications and counter applications.




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